October 27, 2020

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    Tesla Inc informed employees on Tuesday it would furlough all non-essential employees and implement salary cuts during a shut down of its U.S. production plants because of the coronavirus outbreak.

    Tesla stated it prepared to resume normal operations on May 4, blocking any significant changes, according to an email sent to U.S. workers by in-house counsel Valerie Capers Workman, which was seen by Reuters.

    The company, which shut down production at its San Francisco Bay Area vehicle and New York solar roof tile factories on March 24, stated in the email the decisions were part of a broader effort to manage expenses and achieve long-term plans, according to Reuters.

    The coronavirus pandemic has led a decline in U.S. demand for cars and forced several other automakers to furlough American workers.

    Pay for salaried employees will be decreased starting on April 13 and cuts will remain in place until the end of the second quarter, according to the email.

    In the United States, workers’ pay will be slashed by 10%, directors’ salaries by 20% and vice presidents’ salaries by 30%. Comparable decreases will be implemented abroad.

    Workers who cannot work from home and have not been assigned to critical work onsite plants will be furloughed, with workers maintaining their healthcare benefits until production restarts, the email said.

    Tesla suspended production at both plants last month after it put an end to a standoff with authorities concerned about the coronavirus.

    Tesla’s only U.S. auto factory employs over 10,000 workers, with annualized production of slightly over 415,000 units by the end of December 2019.

    The suspension interrupts a scheduled increase in production of its Model Y sport utility vehicle at the factory. Demand for the Model Y is expected to be higher than for all of the automaker’s other models combined, CEO Elon Musk has stated in the past. The Model Y taps into strong demand for SUVs and is much less costly than the high-end Model X.

    Tesla on March 20 stated it believed it had enough liquidity to successfully navigate the extended duration of uncertainty, with some $6.3 billion in cash at the end of the third quarter, ahead of a latest $2.3 billion capital raise.

    The company on Thursday surprised investors with strong first quarter delivery numbers regardless of the coronavirus outbreak affecting nationwide car sales and said Model Y production was ahead of schedule.

    About 401,636 people in the US have been confirmed as being infected with the coronavirus. The virus has killed 12,905 people in the country.


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